Defense Secretary Chuck Hagel put the Pentagon and Congress on notice Wednesday that he is considering fundamental changes to the size of the military’s management and command structures, requiring sweeping and dramatic spending cuts that are likely to hit programs favored by lawmakers.

Hagel said in a speech to the National Defense University at Fort McNair that escalating spending to maintain benefits, existing military structures and replacements for aging weapons programs are devouring funding needed for critical operations, training and equipment.

The Pentagon, he said, must re-evaluate the size of its management and military command structures, which continue to grow even as the overall force numbers decline.

“I am concerned that despite pruning many major procurement programs over the past four years, the military’s modernization strategy still depends on systems that are vastly more expensive and technologically risky than what were promised or budgeted for,” Hagel said.

Hagel also made it clear that any budget cuts should not erode America’s ability to be a force for global leadership.

The Pentagon is already grappling with a $487 billion, 10-year reduction in projected spending as part of the budget law that Obama and congressional Republicans agreed to in August 2011. In addition to that, the military is now facing $41 billion in across-the-board cuts for this fiscal year that went into effect on March 1.

The changes, he said, will involve “not just tweaking or chipping away at existing structures and practices but, where necessary, fashioning entirely new ones that are better suited to 21st century realities and challenges.”

In his first major address as Pentagon chief, Hagel embraced what is likely to be his major challenge in his term: shrinking the U.S. military despite persistent congressional mandates that slash funding but forbid the elimination of favored bases and programs that must be cut in order to achieve the required savings.

Lawmakers have resisted Pentagon pleas for another round of base closures and to trim unwanted aircraft, or proposals to adjust military health care benefits as too politically risky. Closing bases and ending contracts can cost jobs in members’ districts.

“Much more hard work, difficult decisions and strategic prioritizing remains to be done,” Hagel said, noting that “deep political and institutional obstacles to necessary reforms will need to be engaged and overcome.”

While both his predecessors launched reviews to identify hundreds of millions of dollars in savings, Hagel is taking over just as the automatic, across-the-board budget cuts are taking effect. In light of those reductions, he has already ordered a re-evaluation of the defense strategy that President Barack Obama announced early last year.

That strategy called for a greater emphasis on the Asia-Pacific region, a continued focus on the Middle East and an increase in cybersecurity, missile defense and special operations forces.

Asked specifically about the unpaid furlough days that civilians will be forced to take, Hagel acknowledged that the cuts will be painful but unavoidable. As many as 700,000 of the department’s civilian workers will have to take 14 unpaid days off in the coming months to save about $2.5 billion.

But he said officials are also looking at cutting layers of upper and middle management, including in the military commands, and are weighing whether the department has the right mix of military and civilians, and the correct balance of officers and enlisted troops.

He also said he will ask Congress to look at ways to increase various fees, including those for health care and retirement programs.

“We need to be steely-eyed and clearheaded in our analysis, and explore the full range of options for implementing our national security strategy,” he said.